Chapter 19: Waste of Quality

Today Haier is a well-known brand for household appliances. Its products are exported to many countries like India, Vietnam, Indonesia and the United States. Back in the early 1980’s when Haier started off with making washing machines, its quality was so poor that customers asked Haier to take them back. A quick check on its in-house quality audits indicated that more than 50% of the goods produced were rejects that could not be shipped to customers. Rework kept a big chunk of the labor force busy everyday.

Out of wits and hopelessly unable to arrest the poor quality situation the CEO, Zhang Ruimin lined up all the poor quality washing machines in the open yard and gathered all his employees. With a big sledge hammer in hand he raised it up high in the sky and with one big downward swoop smashed it into a washing machine and shattered it into pieces. Up he raised his arm again and plunged the sledge hammer into another washing machine. He repeated this again and again.

The employees were shocked and dumbfounded. “What! He is destroying the fruits of our labor that we have painfully put in many hours to build them.”

Tired out, the CEO passed the sledge hammer to his managers and asked them to continue smashing all the washing machines. They took turns and smashed one washing machine after another.

After all the washing machines had been smashed, he announced to the crowd: “We are not going to sell poor quality products to our customers. I want to sell only good quality products. Poor quality product does not only fetch lower price. It kills our business. The company is in the red now. Soon we are going to be out of job. If you produce one more unit of poor quality product, I’ll smash it.”

The message to the crowd was very clear. There is no way to penetrate a market with poor quality products. Sales revenue was not going to pick up and the company can forego about the business of making washing machines. The company could shut down now. Waste of poor quality had caused the ultimate loss of business to the company and thus, its very survival.

Illustration #1: Quality must be built-in

When I first walked through the production line in Archive Singapore, I observed that production workers sat on both sides of a conveyor belt which was moving at a constant speed. When the first worker finished a small task of assembling the chassis of the tape drive she placed it onto the conveyor which then moved it down to the next worker. The second worker picked it up and assembled other parts onto the chassis and put it back onto the conveyor belt. As the conveyor belt moved the chassis from one worker to the next, the last worker finished the assembly and placed the completed tape drive into a tote box.

I wondered if all the different tasks carried out by the workers were equal to the speed of the conveyor belt. The industrial engineer replied, “No. However, the speed of the conveyor is tuned to the speed of the worker who does the slowest task.”

“What was the output rate expected from the assembly line?” I asked.

The industrial engineer replied, “The conveyor speed was set at 0.1 meter per second. The space between two adjacent workers is one meter and its takes exactly 10 seconds to move one unit of the product from one worker to another. That works out to 360 units an hour.”

Knowing that a worker could not work at a consistent pace throughout the day I asked about the number of units they were producing an hour at present.

The industrial engineer replied, “We produce 324 units an hour on average. That is about 90% in labor efficiency.”

Well. In my mind, that is a productivity level of 90 percent, a considerably wide margin of 10 percent away from 100 percent productivity measured against the slowest worker. This means all the other workers were working at much lower than the 90 percent productivity level.

However, the most critical problem was not the productivity level. The first pass yield of the assembly line was merely 60%. In other words, 40% of the outputs went into the ‘pile of bones’ waiting for its turn to be reworked.

I implemented two strategies to solve both the productivity and quality problems faced by this assembly line.

First, I stopped the conveyor and introduced Kanban trays that were designed to hold only two units of the tape drive chassis. Between two workers, I placed one Kanban tray allowing a maximum of two units of the chassis as Work-In-Progress.

Next, I introduced a simple rule - If the outgoing Kanban tray is full, the worker shall stop producing. Otherwise, she should continue producing. The workers know that if the outgoing tray is empty, the downstream worker would be idle waiting for her to pass down the next chassis. The operator knows she has to speed up. The workers now know how to read the situation when one should speed up and when one can slow down to a normal pace. The productivity went up to more than 95% in just one week.

Second, I introduced a quality concept that very few companies put into practice because the division of labor had split the roles of a production worker and the quality control inspectors. Most companies are organized in clear departmental roles. The production manager told his workers they were responsible to produce goods and meet the output target and not to inspect the product for quality. The assurance of product quality rests with the quality control inspectors. I saw that it was here where the root cause of the problem lied.

Imagine. When the whole bunch of production workers didn’t think it was their responsibility to produce quality products, there was no way the quality control inspector could inspect quality into the product.

To make things worse the industrial engineer could not agree with me initially that the workers should inspect the quality of the product they produced. Inspection is not a value-adding process and everybody knows that. To an industrial engineer, inspection should not be factored into the task of a production worker. That will lower the production output rate.

Figure 19-1: A Kanban system reduces the number of units at risk to the minimum

I managed to convince both the production manager and the industrial engineer to allocate time for the workers to inspect the quality of their own work. Of course, this was accompanied by a few other programs that I introduced in parallel.

In less than one month, the productivity approached 100% every day and the first pass yield went up to 99.7%. Factoring the inspection in should have lowered the production rate but why is it much higher now? Everyone was puzzled. I was not.

I observed sometimes the downstream workers returned the chassis to the upstream worker to get it reworked. After getting the workers to inspect their work, the passing of rework unit back to the upstream worker came to a complete halt. This accounted for the productivity approaching 100% productivity level.

Incidentally, asking the workers to inspect their own work actually means telling the worker to build quality into the product. If she finds anything wrong with her workmanship, she immediately reworks it. She does not want the downstream worker to pass a poor quality unit back to her for rework. That is the essence of built-in quality.

Figure 19-2: Immediate feedback system

Months later I began to notice that on some days the production line did not produce a single unit of reject. That struck something in me. Back in 1980 when I started out in my first job with Hitachi Semiconductor Malaysia, I saw a neon lit signboard placed right in the center of the factory compound. It read, “Zero Defects”.

Back then I could not understand how a factory can achieve zero defects. I thought to myself, “Ah! It is another publicity drive by the company to create the awareness for quality”. And right in my face, the production line had indeed begun to produce goods with zero defects. Zero defects now made sense to me.

While traveling to work, I often see big notice boards erected in front of most construction sites. The first line reads, “Number of days accident-free – xxx” I told myself, why don’t I do something similar? Instead of ‘number of days accident-free’, I replace it with ‘number of consecutive days of zero defects’.

In one of the weekly Just-In-Time program review meeting I told the managing director and his staff that it was about time to introduce a campaign for zero defects. Every one of them laughed at me. Fresh in their memories, the production lines were throwing out 40 percent rejects one year ago. Now I was asking for zero defects. They thought I had to be joking.

I continued to push my idea to them, “Well! Give me a try. Anyway it is not going to do any harm to the company. Getting the workers to drive towards zero defects is certainly the best thing you can do to create quality awareness.”

I bought a few pieces of white boards. In each of them I wrote two lines: Current consecutive number of days zero defects ____ and Record number of days zero defects _____. I went on to ask the production supervisors to update the board in the morning every day.

All the production supervisors looked at me in disbelief. In their mind they were thinking, “Are you nuts? There is no way we can achieve zero defects.”

However, though in utter disbelief, the supervisors gave me the full benefit of doubts and updated the zero defects communication boards diligently. It all began with one of the production lines producing zero defects forone day.

“Ah! That was by chance,” exclaimed the production supervisors.

But that number slowly crept up day by day. When a defect cropped up, the production supervisor set the count back to zero and started counting the current consecutive number of day zero defects from zero. But down on the second line, the record number of days zero defects had become a positive number.

The managing director and his staff conducted MBWA - Managing By Walking Around every Friday and they began to notice the incremental rise in the record number of days of zero defects. The managing director commented, “Hey! Eric means business! He was so confident of the ability of the production people before he proposed to me to launch the zero defects campaign. We almost failed him.”

One of the production lines managed to achieve a record of 163 consecutive days zero defects. That is about half a year. Unbelievable achievement! But it happened.

Quality must be built-in. Zero defect is not something that is not achievable. The crux of the quality problem is not to accept the excuse that the production process is high-tech, sophisticated or the product is too complex. It is how you organize the people to produce quality goods that matters.